Posts Tagged ‘IT services’
Startups have short launchpads and high expectations. In order to lighten the yoke, many startup founders turn to outsourcing, letting a third party provider handle some aspects of the business.
If you do it the “right way”, you can build a very successful company that way. The right way is *not* to think of your remote team members as outsourcing, but as a key part of your team.
In considering outsourcing as a potential option, you must first weigh the positive and negative impacts. Outsourcing frees up leadership to focus on the parts of the business that differentiate you from the competition, while staying assured that the basic parts are all still operating properly.
Outsourcing is a great option for some startups, but it can be confusing. There’re 5 questions you should answer to decide if outsourcing is the solution:
What is outsourcing?
Outsourcing is the farming out of a business process or service to a third-party provider. Outsourcing frees up some mental space for founders and can sometimes even save money.
What exactly are you outsourcing?
There are certain skillsets which are difficult to bring in-house. It is essential to understand what you will and what you will not be outsourcing, to understand what should rest totally in your control and what can be handled by someone else.
Is the vendor startup-oriented?
The choice of which company to outsource to is important. Vendor should be very active in implanting best practices from the software industry into the startups they work with.
Are you a good client?
Good clients should know what they want, otherwise they’re effectively wasting their own money. A highly collaborative attitude is helpful too. Clients should want to understand the development process just as developers should get a handle in the product’s business objectives. A mismatch between end-project and expectations is often the result of poor communication.
Does the reputation of the vendor matter to you?
People often rely on reputation to make outsourcing decisions. Ask for reviews and recommendations of providers to try and determine which one best fits your needs.
Outsourcing is one of the earliest crucial decisions that startups have to make after inception. Often, the decision lies not in whether to outsource, but who to outsource to and how.
Do you outsource? Please share your experience in comments bellow.
Professional Software Development
Fear of surrendering control is probably the main factor holding many IT directors back from realizing the benefits of outsourcing IT services. But if you can find an IT services supplier who will work with you in a genuine partnership, understanding the specific needs of your business, it soon becomes clear that this fear is misplaced. It is perfectly possible to retain your strategic power while outsourcing the fundamental and mundane elements of your IT service and support. By opening the door to outsourcing some niche services or even your entire application or database management infrastructure, you can generate a host of business benefits.
The top 10 benefits of outsourcing
- Reduced service and support costs within a managed and predictable budget
- Better quality of service, fewer IT failures and less downtime thanks to well-defined service level agreements
- Access to the latest applications without high up-front license costs
- Access to accredited engineers, skills and technical expertise without having to train your own staff
- Reduced risk of employees leaving and taking their knowledge with them
- Round-the-clock access to a help desk primed to resolve problems remotely and rapidly
- Compliance with the latest regulations
- Guaranteed data security at remote, hosted data centers
- Real accountability via contracted commitments from a third party supplier partner that wants to keep your business rather than reliance on an in-house group that is hard to pin down
- Remove high IT staff costs from your balance sheet and shift to an opex budget
For some time, there have been signs that IT directors in smaller enterprises are increasingly receptive to these benefits and are even embracing them with greater agility than their global counterparts. A survey from Computer Economics suggested that 27% of businesses now outsource applications management, while 21% outsource database management.
According to Information Week, as this level of outsourcing gains credibility the benefits quickly accumulate in terms of greater flexibility (particularly for companies that are growing rapidly); access to cost-effective expertise, techniques and programs; access to third-party resources such as the help desk, which liberates IT staff to focus on more productive business-focused activities; and the wider savings achieved by not having to invest in infrastructure and licenses.
Take email services as one example: Gartner estimates that outsourcing just this one application could save businesses with fewer than 300 employees a significant amount because an outsourcing partner has the dedicated infrastructure to manage it at a much lower cost.
Five reasons to outsource
Here are five good reasons why you should think about outsourcing your IT services:
1. You could save significant staff costs.
Not just on the recruitment and hiring front. Skilled people with strong application-based credentials don’t come cheap and have long-term costs. Why spend time and money training somebody to support a core business application, only to see them poached by another employer and taking their expensively-acquired skills with them? Or send them to costly training to keep their skills current? And why not liberate your in-house IT staff to focus on projects that add value to the business rather than spending their precious time on firefighting duty?
2. An outsourced call center/help desk frees your resources.
Providing round-the-clock support for your users in-house is expensive. Depending on the size of your business, you might need a dedicated facility that is operated by key IT support staff and is a significant cost center in terms of facilities management overheads. Even in a smaller IT operation, somebody—it might even be you—has to be on call outside office hours to provide IT support for an increasingly mobile workforce. Thanks to greater economies of scale, a dynamic IT services partner should provide a superior help desk at a greatly reduced cost.
3. You can save money all around – with the right outsourcing strategy and partner.
A good IT services partner will work with you to identify the pressure points that make sense for you to outsource. These can vary tremendously from one business to another. Toolbox.com points out that cost savings vary with the number of employees who need support and to what degree, the number of devices involved, the types of applications that you use, the ratio of employees using office space to remote workers, and even your geographic location when it comes to the price of on-site support. These are complex calculations that deserve patient analysis.
4. Your business will be more flexible in its use and consumption of IT services.
Infrastructure is expensive. Why invest in servers, complex networks and other hardware just to deliver vital but everyday applications to your users when you can have those applications managed and distributed as a service direct to the desktop without the expense of hardware maintenance? Because your applications are being managed and hosted by a third party, they can be scaled up or down to meet fluctuating demand, and your costs will be more tightly controlled as a result.
5. Peace of mind.
Why let worries about more complex issues such as data security or disaster recovery keep you awake at night when they can be managed and supported by a third party who has all the necessary expertise and infrastructure to meet your security and business continuity requirements? Yes, they are important, but by choosing the right partner to provide relevant support services, you are prioritizing them rather than allowing them to become distractions that need constant attention from your in-house IT team.
Negotiation is the key to getting your relationship with your IT services supplier off to the best start and making sure you realize the business benefits that you expect. And it starts long before the contract is signed. It should be more profitable if you decide what you want from your contract before you choose your supplier.
Select an IT service partner who demonstrates they understand your business and clearly articulates the value they can bring to your operations. By combining and matching your goals with an IT service partner who has the vision to match them and deliver the latest service desk technologies to provide you with complete service performance visibility, including measurable indications of performance quality, you’ll soon become part of the rising tide of SMEs that are living proof of the benefits of outsourcing.
- Outsourcing IT services does not mean all or nothing.
- You can deliver genuine benefits to your business by outsourcing IT services if you negotiate service levels that are customized to your company.
- Fear of surrendering control is the main factor holding many IT directors back from outsourcing IT services—but you can keep control if you select the right partner.
Feel free to share your thoughts.
Despite the fact that Sweden has not always been a welfare state, now it is quite a stable and prosperous country with a good standard of living, a country, which is constantly developing. Let’s see how this development influences IT market, for example.
Sweden is making large annual investments in education and research and it is well-known for its good education level. Development has also come into information and communications technology, where Sweden is one of the leading countries in the world. However, the current problem in labor market is that there is not enough workforce in service companies, information technology, school system and health care sectors. Despite high technology level, Swedish people love their nature and concern for nature is playing a big role in future decisions. That is why Sweden is also putting a lot of effort to improve the environmental technology, which will be one of the most important industries in the future.
- Swedish IT sector
is strongly bound to the development of society. Sweden has many successful companies in IT and telecommunication sector and the companies have a great capacity of innovation. However from 34 000 of companies in Swedish ICT sector are micro enterprises with under 100 000€ turnover.
IT sector can be divided into four sub-sectors: Software and IT services, Tele-and data communications, manufacture of hardware and retail and services of computer . IT sector in Sweden is mostly dominated by the software market. Most of them have specialized in systems software for communications, business systems and applications software for telecommunications.
Software products and IT services earn 32% of the turnover in IT-sector. The growth in the software products and IT services has been very strong. The turnover has increased 32.5% between the year 2005 and 2009. The second in the IT-sector is Telecom and datacom services with 27.3%, manufacture of hardware comes next with 24.5% and the fourth largest is retail and servicing the hardware.
Swedish IT- sector employs about 3.9% of the total Swedish work force. Despite the economic recession, Swedish IT sector has stayed healthy. The main reason of IT sectors welfare is that the companies in Sweden believe that the IT-services and IT-products are essential for survival in the future. IT solutions are the key factor when it comes to make the business more effective and environmentally friendly. That is why the companies are putting effort to develop the IT solutions. Especially environmentally friendly solutions are the focus in the future in Sweden. Almost every company uses computers (97%) and 96% of them have an access to Internet. Internet has increased its significance in doing business.
- Mobile services
Are an increasing trend in business life. Already 60% of all companies are using mobile Internet connections in 2010. Swedish people are interested in a product which can increase their customers’ competitiveness and increase the company’s value for its owners, customers and another interest groups.
Swedish people are open-minded to test new services and products. The good thing is that they might accept the new product or service very easily, but the challenge is to keep the product or service updated. People in Sweden are well educated and they are looking all the time new innovative ways to run the business.
– The majority of companies cost are spent on software research and development. So they are willing to invest on software if they can see the product useful for the business. The most favorable applications are such as ERP, CRM, financial management and information software, on which the companies are spending about 60% of their founds.
-The environmental study concentrated more on macro indicators which means background forces behind the company’s activities such as social, technological, economical and political environment.
-Sweden’s lifestyle and culture form an ideal market place, because they are open-minded to test new services and products. The people are well educated and they are all the time searching for new innovation solutions to run their business. The positive point is that the customers are willing to accept new innovation, but they can also replace it when they can find a better solution. So the major challenge is to keep the product development up.
– Sweden is one of the leading countries in the development of information and communications technology. Almost every company has computer and Internet access and already 60% of all companies had a mobile Internet connection in 2010. So, mobile phones are becoming more and more important on daily business.
– Swedish people are putting a lot of effort to improve the environmental technology, so this “eco” thinking has a strong position in Swedish culture.
– Sweden is making a lot effort to software research and development and they want to be the top leaders in the software markets by 2020.
-The global software leaders Microsoft, International Business Machines (IBM), Oracle and SAP are also leading the Swedish software markets, but they are controlling particular areas of software branch which is why the local companies have also acquired a good position on the market.
-Swedish software and IT services have a larger number of companies than the other sub-sectors, but most of them are small companies.
– IT outsourcing has been a steadily growing part of the Swedish IT market, which is considered to be the largest market within the Nordic region and the 3rd largest in Europe. Every year more Swedish companies decide to outsource. The majority of Swedish companies decide to outsource due to conditions such as a shortage of IT domestic skills and high costs of performing in-house solutions, or a need to re-focus on core competencies. In order to avoid multiplied risks associated to outsourcing.
And what tendencies in Swedish IT market would you like to point out? It is interesting to know your opinion!
Business Development Manager
Professional Software Development
The German IT market is the largest in Europe and number 4 in the world (behind US, China and Japan). According to market research it is forecast to grow at a CAGR of 4% over 2011-2015. The addressable domestic market for IT products and services is projected by BMI to reach US$60.8bn in 2011 and US$71.8bn by 2015.
German IT services spending is forecast to reach US$24.8bn in 2011 and to rise to US$29.9bn in 2015. Demand drivers will include emerging technologies, such as projects to enable SaaS use, and reducing costs through data centre infrastructure outsourcing.
Despite the fact that German market is relatively mature, there is plenty of potential for ERP implementations in industries such as consumer products, telecommunications, energy, engineering transport and retail. ERP demand drivers include boosting the efficiency of global supply chains and logistics processes. Meantime, business intelligence will continue to be one of the fastest-growing product areas in 2011.
Industry Developments Government funding for technology policy measures amounted to EUR2.3bn. The German has announced it will provide an additional EUR12bn for education as well as research and development (R&D). Among other priorities, the government is determined to encourage German companies to innovate, to cope in the economic upturn.
In 2011, software vendors in the German market will focus increasingly on cloud computing. In October 2010, Microsoft launched a cloud computing alliance with German-based Datapoint, a provider of ICT services to the public sector. Meanwhile, SAP launched a new version of its hosted CRM software product SalesOnDemand, after the first version, released five years before, had failed to really take off.
One distinctive feature of the market is the influence of medium-sized companies. The German software market is competitive, with smaller companies having a niche alongside major players such as German software giant SAP, Oracle and Microsoft. Around 300 software providers compete in the enterprise resource planning (ERP) market for the small and medium-sized enterprise (SME) segment alone. Other major players across all segments include Sage, SoftM and Infor Global Solutions.
As far as German market characteristics are concerned, the German market differs from other European markets: German market is peripheral. If you want to sell to France, you have to be in Paris – and you have 90% of the market nearby. If you sell to the UK, you have to be in London – and you have 90% of the market nearby. If you sell to Germany you have to be everywhere. There is no single town dominating everything – particularly not Berlin. There are core areas for some market sectors. Frankfurt is such a core area for the finance market, Berlin for the governmental business and Munich for the IT companies. But Hamburg, Düsseldorf, Cologne, Stuttgart, Nuremberg are also important places for the business. And we shouldn`t forget about Bremen, Hannover, Mannheim, Karlsruhe, Leipzig .
German IT market seems to be rather perspective for market players. But we shouldn`t forget that in order to be a successful market player we should follow “the receiving party rules”.
Gartner’s outsourcing tip: “Don’t just seek the leaders blindly – determine which vendors are the right fit for your organization”
Posted July 7, 2011on:
The debate on the success of outsourcing as an industry seems to last endlessly. Over the years outsourcing contracts underwent a lot of changes – as the result we now see more multi-sourcing engagements and smaller focused contracts. In fact outsourcing contracts shrank in length or value per contract, but the relationship with the client has endured. Indeed, it’s relations, not size that matters. So, recently the issue of a choice of a right vendor for an outsourcing contract has become even sharper and vital for a larger number of companies in IT industry.
Many organizations that want to outsource IT services are intimidated by the task of determining which location in general and vendor in particular would best suit their requirements. Many researches in the field have been made. If in the early days of outsourcing price level was the weightiest criterion, now determination of an outsourcing partner and their geo-location is based on a whole system of criteria including not solely cost competitiveness based ones but key statistics on resources and skills level, country’s business and economic environment. Among them you may see English (French, German, etc) language skills, educational system quality, cultural compatibility, political and economic environment, global and legal maturity, and data and intellectual property security and privacy.
Historically such low-cost locations as India for instance were very popular offshore outsourcing destinations, still recently with the maturation of IT domain and with recent wage inflation and educational challenges these locations have receded their position as outsourcers now expect more “added value” to their projects and business. In this respect more attention is paid to Eastern European region, especially by Western and Northern European companies. Germany, Switzerland and Austria along with the Nordics in particular perceive Eastern Europe as a favored nearshore destination. Eastern Europe ranks high in terms of efficiency of technical education, work ethics and cultural sensitivity adding to the region’s geo-attractiveness as a base for outsourced activity.
Many respectable researchers think in the next ten years it is likely that Eastern Europe will move out from being an ‘emerging destination’ to a ‘key destination’ for outsourced activity: even though facing continued cost pressure from Indian market and despite being largely ‘overlooked’ by US based outsourcing providers, it is expected to proceed receiving its share of traditional high end software engineering and other IT services, from Western and Northern Europe. Many who experienced outsourcing there are characterizing Eastern Europe (Lithuania, Russia, Belarus, Ukraine, etc) as [a good place to find low cost, technically superb coders,.. generally hard workers, honest in answers to any your questions and strategically thinking].
Anyway, all these ratings of outsourcing locations are just generalization – anywhere you may find good and worse executors. As Gartner tips: “Don’t just seek the leaders – determine which vendors are the right fit for your organization”.
Well, perhaps very generally it would be a bad idea to hire designers from South East Asia if you expect a Western looking result :), still efficiency of an IT service provider should be checked in each particular case. There are a couple of advises helping to choose a good provider:
– Choose companies who have good feedback, ratings and recommendations. If a company follows market trends, makes marketing and technical researches, has good recommendations, especially from the companies from your geo-region, these all mark quite a solid level of credibility.
– Be careful about generic responses. This mostly concerns a stage when particular project details/requirements are already discussed. The tip considers both parties actually 🙂
– Start cooperation with a relatively small test/pilot project to evaluate provider’s competences. Altabel Group’s experience shows it’s natural for our clients to develop a pilot project with us to confirm our competences and then organically move on to Dedicated Development Team model for further cooperation.
– Try to meet your partners personally at initial stages of cooperation. Arrange short trips to visit a provider and especially meet your team members face to face.
– Think “potentially”. Keep contact information of those companies whose responses you liked for future references even if they do not fit your current project requirements.
And what are tips from personal experience? When does outsourcing have the best chances to succeed or fail? Do you have any preference in terms of a region to outsource from?
You are welcome to share your opinions here.
Helen Boyarchuk – Business Development Manager (LI page)
Helen.Boyarchuk@altabel.com | Skype ID: helen_boyarchuk
Altabel Group – Professional Software Development